What's Wire Fraud Again? Everything You Wanted to Know About the John Liu Aide Scandal

On Thursday, two of John Liu's former aides were found guilty in an illegal scheme to raise funds for Liu's mayoral race. Want the simplest breakdown? Read on.

So, who are these people?

Xing Wu (Oliver) Pan is a real-estate developer and was a campaign fundraiser for mayoral hopeful John Liu, and Jia (Jenny) Hou served as Liu's campaign treasurer. Hou, the daughter of one of Liu's friends, was a mere 25 years old when she was charged, and paid just $27,678 by the Liu campaign while she was treasurer, according to the Daily News. Both Pan and Hou were convicted of engaging in a plot to funnel large funds from individual donors through "straw donors" and get matching funds from the city.

What were they actually charged with?

In 2011, the FBI arrested Pan on charges of conspiracy to commit wire fraud and one count of attempting to commit wire fraud, and in early 2012, those same charges were filed against Hou, along with obstruction of justice.

And then...

After two and a half weeks of trial and one day of deliberating, on Thursday a jury in federal court found Pan guilty of conspiring to commit wire fraud and attempted wire fraud. The jury found Hou guilty of attempting wire fraud (though not conspiracy), obstruction of justice, and lying to the FBI.

I forget what wire fraud is.

Like regular fraud, with wires! No, it's just fraud that's been committed by phone or some other telecommunication device, as opposed to snail mail.

Explain what they were trying to do with straw donors.

Current campaign finance laws limit individual campaign contributions to $4,950. If you're loaded, however, and really want someone to become mayor, you might feel that 5K is harshing your political influence buzz. Pan and Hou took in large donations from individual donors, then claimed they were actually smaller donations made by multiple people.

And the thing about matching campaign funds?

For donors over 18, the city will match campaign donations with $6 per dollar up to the first $175, if the candidate so chooses. A candidate can receive as much as $1,050 in matching donations from the city per donor.

How'd the FBI figure it out?

Through a good ol' fashioned sting operation. In August of 2011, an undercover FBI agent posing as a businessman gave Pan $16,000 towards Liu's campaign. According to the original complaint, Pan used 20 straw donors to make $800 donations each, then paid them back with the FBI agent's money. The FBI agent also testified that Hou instructed a campaign volunteer to forge the handwriting of donors on forms to the NYC Campaign Finance Board, that she offered to reimburse a donor, and discussed ways to conceal info about the straw donors, among other acts.
In other words...

"As the jury found, Jia Hou and Oliver Pan stuck a knife into the heart of New York City's campaign finance law by violating the prohibition against illegal campaign contributions, all to corruptly advantage the campaign of a candidate for city-wide office," US Attorney Preet Bharara said in a statement.

What happens now?

Pan faces a max sentence of 40 years, and Hou 45. Their sentencing date is September 20.

And Liu?

Though he's been wiretapped and investigated over the past four years, Liu hasn't been charged with any wrongdoing. After a mayoral forum at a Brooklyn school last night, Liu held an emergency press conference about the verdicts. "I'm deeply saddened by the turn of events today," he told reporters. "I continue to believe that Jenny's a good person, and we will continue to ask the voters of this city for their support in my campaign to be mayor of New York City."